Global Trade Management 2007

Aberdeen recently released a research brief on Global Trade Management in 2007 Benchmarking Trade Compliance, Global Supply Chain Visibility and Risk Management Practices in advance of their forthcoming study on Global Trade Management (with a scheduled release date of May 31) that highlighted this years focus in Global Trade Management (GTM): improving agility, trade compliance, and risk management.

This brief highlighted the alarming statistic that 90% of participants in the 2006 Global Supply Chain Benchmark study reported that their global supply chain technology was inadequate to provide the corporate finance organization with the timely information it required for budget and cash flow management. Thus, the importance of Supply Chain Finance (SCF), as highlighted in yesterday’s post should not be overlooked.

The brief outlines their Best-In-Class PACE (Pressures, Actions, Capabilities, and Enablers) hypothesis which they outlined as follows:

Pressures Actions Capabilities Enablers
  • Lack of critical supply chain process visibility
  • Move to a paperless GTM process
  • Implement new processes that enhance agility
  • A centralized global supply chain management organization
  • A cross-functional purchasing, supply chain, and finance team to oversee GTM strategies
  • Online visibility into international order and supplier event status
  • Online visibility into in-transit shipment status
  • Supply Chain Visibility Platform
  • Import Compliance Automation Platform
  • Export Compliance Automation Platform
  • Preferential Trade Agreement Automation
  • Risk Management Tools

Not a bad start, but I would hypothesize the following:

Pressures Actions Capabilities Enablers
  • Lack of critical supply chain process visibility
  • Lack of insight into supply chain risks
  • move to a paperless GTM process
  • implement new processes that enhance agility
  • implement end-to-end e-Sourcing, e-Procurement, & e-Logistics Management systems to simplify and enable the GTM process, including relevant SCF solutions
  • Center-led supply chain organization
  • Cross-fucntional purchasing, logistics, finance, and engineering team to oversee GTM strategies
  • Online visibility into international order & supplier event status (including in-transit shipment status)
  • Online visibility into status of 3PL carriers and international ports (of entry)
  • Online visibility into risk mitigation efforts
  • Online visibility into alternate supplier status
  • Supply Chain Visibility Platform
  • Import & Export Compliance Automation Platform
  • Non-Preferential & Preferential Trade Agreement Automation
  • Risk Management Tools
  • Enhanced Spend Analysis Tools

My rationale for this is the following:

Pressures Actions Capabilities Enablers
Process visibility is good, as this allows you to improve your processes, but if you overlook key risks, your supply chain could still be brought to a grinding halt no matter how efficient your processes are A good GTM process is enabled by the proper SCM systems, and these will need to adequately cover e-Sourcing, e-Procurement, and e-Logistics, as well as the appropriate areas of Supply Chain Finance and International Trade Management if an organization is to achieve efficient, paperless processes Center-Led is better than centralization. As indicated in my weekend series over on eSourcing Forum last summer (Part I, Part II, and Part III) and in the Center Led Wiki, not everything is appropriate to centralized sourcing or management. A Center-Led organization allows you to centralize where it makes sense, and decentralize where it does not.

Don’t overlook engineering when evaluating key suppliers and supply risks – they will often know more from a product standpoint than the rest of the organization combined!

It’s important to not only track the status of the carriers you’re using, but the inbound ports (of entry) you’ll be using as well. For example, if you are shipping ocean freight and the planned port of entry is expected to be hit by a hurricane, you need to be able to re-route the shipment. Also, if you have a choice between ports, sometimes its best to use the port with the fastest turn-around time if the items are perishable or the valuation is dependent on how fast you get the product to market.

Don’t overlook spend analysis – it lets you know who you are spending with, how much, and when. This will help you identify key suppliers, carriers, ports, etc. that need to be addressed in your global trade and risk management plans.

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